What Is the Best Degree for Binary Options Trader?

When it comes to trading in the financial markets, even those with engineering or master’s degree fail. The reason is that more than knowledge, it is the ability to take quick and resolute decisions that matter at the end. However, having a relevant degree will go a long way in carving success in the field of binary options trading. First, let us discuss the expertise required by a binary options trader. Finally, we can arrive at the degree, which will empower a trader with the discussed skills and contribute to the profitability in a maximum way.

Knowledge about binary options

A wannabe binary options trader should have a clear understanding about different kind of options (vanilla and exotic), the way they derive their value and lose it over a period of time. None other than a finance management graduate will usually have an in-depth knowledge about options trading. Thus, we can safely say that a finance graduate starts his trading career at an advantage relative to other traders who do not hold a legitimate finance degree.

Reasoning ability

A binary options trader should be able to pick the proper asset to trade in the market. Trading the right asset at the right time is quite important to success in binary options trading. In this regard, a Computer science degree, which will cultivate reasoning ability, is the preferred one. A binary options trader with a Computer science background will be able to pick up trending stocks in a better manner than others. Likewise, having a Math degree will only enable a trader to easily assess probable risk and reward before entering a binary options trade.

However, a trader with a finance degree will have both reasoning ability as well as practical knowledge of using different trading related ratios to his advantage. Thus, it can be stated that a trader with a degree in finance will be better equipped to act on the available data.

Data mining capability

A binary options trader should have adequate knowledge to understand the historical price data of a security. It is a well known fact that there exists a definite link between past and future price movements of a security. A trader should possess the skills to visualize the bigger trend by sorting out noises (extremely short-term price movements) that exist in between. Having such abilities will enable a trader to predict the future price movements with an admirable percentage of success. Generally, people with Computer science or Physics degree tend to understand and interpret historical data better than those with different educational qualification. In fact, most of the theorems in Physics deal with smoothing and interpretation of data established through various experiments. Thus, it would certainly be easier for them to deal with a large quantum of data. However, not all the Computer science or Physics graduates know the manner in which these data can be applied practically in a financial market. It is usually the Finance graduates who excel in such a job as it is their daily routine.

Computational skills

A trading strategy should be created to capitalize on the price movement, once a binary options trader understands the bigger picture reflected by the price data of a security. This requires in-depth understanding of Mathematical theories such as fractals, Fibonaccci and Lucas numbers, Fourier theorem, and time cycles. A Math or Physics degree holder will have a basic understanding of the aforesaid theories. However, applying these theories practically on a large amount of data is a totally different kind of job. Only those who possess a degree in finance are adept in it. One can argue that most of these features are available in almost all the menu driven charts and analysis software. Still, applying those Mathematical theories as lines on a chart in a proper manner requires in-depth understanding. Finance graduates are usually taught the way in which these theories can be applied to predict the course of the market. Thus, we can safely argue that a finance graduate, among others, is more suited to handle the computational work involved in binary options trading.

With better computational skills, which a finance degree holder will naturally possess, a binary options trader will be able to create a proper trading strategy that can handle different kinds of trades. Additionally, finance related courses also teach basic programming. Thus, a trader with finance degree will also be able to automate binary options trading in a small span of time.

Back-testing

Adequate back-testing needs to be done before applying a trading strategy in a real-account. Even traders with a Computer science degree will be able to back-test and study the resulting data with great accuracy. However, a degree in finance will enable a trader to quickly minimize the defects (fine-tune the system), which are associated with a trading strategy. Without such a skill, a trader will be ever searching for a holy grail, which practically does not exist in the trading world.

To fine-tune a trading system, parameter optimization should be done. This requires good understanding of various technical indicators as well. Again, a trader with Math background will be better equipped to handle it. However, a trader with finance degree will be able to show the flexibility in changing the parameters according to his requirement and test it as well in a simulation environment.

Suitable degree

From the above discussion, we can come to a conclusion that traders with Math, Physics or Computer science background will generally be able to efficiently handle binary options trading related matters. However, it is the Finance graduates who will be able to apply the same perfectly in real-world.

A trader who may not possess a degree in finance will still be an exceptional binary options trader. However, a trader with a finance degree will be able to achieve the same results with less difficulty. Moreover, a trader with finance degree will always enjoy the binary options trading profession and at the same time be ready to face the trading related challenges thrown at him.